It was further reduced to 20% in January 2004. This has very positive implications for existing and future foreign investors in the financial sector.

The New Capital Market Law. A Capital Market Law has been promulgated in June 2003. The Law establishes a new government regulatory body, the Securities Exchange Commission (SEC), which will have authority to make rules and regulations and will have the necessary enforcement powers. SEC will be the primary regulatory body for the capital market activities and its primary responsibility will be to promote the development of an efficient, vibrant, fair and transparent market. The SEC will also be responsible for specific initiatives to deepen and broaden the securities market for enhanced socio- economic development. The Law also envisages the creation of Saudi Arabian Securities Exchange. This will be a privately owned company governed by a Board of Directors that will include members from the private and the public sectors. The company will be the exclusive market for publicly traded securities and will act as a self-regulatory organization. The Securities Exchange company has been tasked with various functions including ensuring fairness and transparency, admission of members, listing of securities, and promotion of corporate governance. It will have sole authority to settle and register transactions of securities. It is worth mentioning that the provisions of the Capital Market Law are consistent with standards published by the International Organization of Securities Commissions (IOSCO). The Capital Market Law brings Saudi Arabia’s securities laws into the mainstream of modern securities regulatory practices embraced by IOSCO members.

The New Insurance Law. In July 2003, Saudi Arabia has promulgated an Insurance Law that provides a legal and regulatory framework for the domestic insurance market which was hitherto unregulated. Over the years, this market has grown sizably and over 150 domestic and international companies operate in various forms – joint-stock companies, branches, agencies, brokerage houses, etc. Many unlicensed companies and individuals sell a range of insurance and investments products including automobile, life,

health

and

education

policies.

These

companies

take

billions

of

premiums that are generally invested in foreign financial markets. The

dollars in annual new Law provides

that the Saudi Arabian Monetary Agency will become authority for this sector. All market participants are

the licensing and the to be licensed and a

regulatory regulatory

infrastructure is being The insurance market

developed will have

to ensure a competitive, vibrant proper rules and regulations to

and transparent market. ensure sound corporate

governance

and

investor

protection.

SAMA

has

already

developed

an

organizational

framework

and

an

experienced

supervisory

team

to

regulate

this

important

sector.

7.

Recap of Major Achievements and Prospects for the Next Decade

Over the past half century, despite the fact that the Saudi economy, like other oil economies, has been buffeted by the turbulences of the global economy and the volatilities of the oil market, its financial system has remained sound, stable and credible. It has coped well with the demands placed upon it and no Saudi bank has ever failed. Banking problems